The worsening of the euro area’s economic prospects and the decline in oil prices justify this month’s interest-rate cut by the European Central Bank, Bundesbank President Jens Weidmann, who is also an ECB Governing Council member, was cited as saying in an interview published today in Het Financieele Dagblad.
The outcome of the last summit of European leaders left room for interpretation and was damaging because it gave the impression the meeting was about only a collective-liability arrangement for banks, the Amsterdam-based newspaper cited Weidmann as saying.
Euro-area nations “should discuss giving up sovereignty with the same openness as the question of how to resolve the debt problem collectively,” he told the paper.
The involvement of non-European Union organizations in trying to resolve the euro-zone crisis can help because it brings a neutral party to the table, but it can also be a concern because they don’t fully grasp the complexity of the issue, Weidmann said in response to a question about the role of the International Monetary Fund, according to the newspaper.
Euro nations should consider further integration with shared liability, preferably in the form of a fiscal federation, the newspaper cited him as saying. A eurozone with fewer members would have “huge financial consequences,” he told the paper.
The restructuring programs for nations that have received aid are working and results have been achieved in Ireland and Portugal while the divergence of economies within the euro zone has narrowed, Weidmann was cited as saying.